Stents, St. Joseph and the perverse incentives of health care

Our view: A Senate report shows that a hospital, device maker and doctor were focused on boosting the use of a particularly lucrative procedure

December 07, 2010

It may be too early to conclude for certain that Dr. Mark Midei is to blame for excessive and improper implantation of cardiac stents in his patients at St. Joseph Medical Center, but after a report on the matter by a U.S. Senate committee, it is not too early to conclude that the system by which doctors, hospitals and medical device makers profit from the high volume, if not high quality, of health care is deeply flawed.

The Senate Finance Committee's report adds to what was already an unseemly story in which St. Joseph paid a $22 million fine (though it admitted no wrongdoing) in an alleged kickback scheme, and in which the hospital has notified patients that Dr. Midei may have implanted 585 stents improperly. Now we have tales of stent manufacturer Abbott Laboratories wining and dining Dr. Midei even after he had been suspended from St. Joseph amid questions about his practices. Although Dr. Midei continues to insist that his actions were all in the best interests of his patients, it is clear that he was a star in a system in which profits were the primary concern.

The e-mail traffic among Abbott executives wasn't about the great outcomes Dr. Midei was achieving, or the rarity of complications among his patients. It was about quantity. Company officials marveled that Dr. Midei may have set a record at one point by inserting 30 stents (which can cost more than $1,000 each for the device alone) in a single day. Likewise, St. Joseph officials recruited Dr. Midei and offered him a $1.2 million salary because they were worried that a pending merger involving his cardiology group would mean he would no longer be doing stent procedures (for which the hospital can bill about $12,000 each for a half-hour's work) at St. Joseph.

And whatever the court cases may eventually reveal about Dr. Midei's methods, this much is clear: After a landmark 2007 study in the New England Journal of Medicine concluded that stents were often not beneficial, Dr. Midei's use of them increased, by his own estimate, 50 percent, to about 1,200 a year.

And who paid for it? Mostly, the taxpayers. Medicare paid $3.5 billion last year for stent procedures nationwide, down from about $5 billion a year before the 2007 study. Of the $6.6 million St. Joseph billed for what are now considered questionable procedures, Medicare paid $3.8 million.

The methods Abbott used to keep Dr. Midei in the fold were particularly unseemly. The device manufacturer rated him as one of the top five cardiologists in the Northeast for use of the company's stents, and it went to great lengths to reward and cement his loyalty, most notably by hiring Andy Nelson's Barbecue to roast a whole pig on Dr. Midei's northern Baltimore County estate in a $1,400 party for the St. Joseph cardiology staff.

Even after Dr. Midei was suspended by St. Joseph, the company paid him $37,000 in consulting fees to spread the word to other cardiologists about Abbott's products, seeking to manage his appearances to avoid the negative effects of the publicity surrounding the investigation into his practices. Abbott officials eventually became so concerned that Dr. Midei's troubles would affect their bottom line that they curtailed a trip to Asia in which he was to be an ambassador for the company's stents — and at one point suggested that they should get the "Philly mob" to stop Sun columnist Jay Hancock from writing about the case. Although Dr. Midei's 30-stent days at St. Joseph were over, the company hoped to use him as an ambassador to other cardiologists to get them to replicate his methods.

St. Joseph says it has implemented new peer review measures to ensure that something like this can't happen again, and the publicity about the case has led to increased scrutiny of stents throughout Maryland and the nation.

But the issue is bigger than one doctor or one hospital or one particularly lucrative procedure. The problem is that our system of paying for health care creates perverse market incentives for everyone in the system. The 2007 study didn't find that stents are worthless, just that not implanting a stent can often be as good — and avoids the real risks of complications or even death from the procedure. But hospitals can't bill $12,000 for deciding not to implant a stent, even if that's the best thing for the patient.

There are other models for delivering and paying for health care, such as accountable care organizations, which include incentives for quality and efficiency, not quantity. The federal health care reform law includes a mechanism for the voluntary development such models under Medicare, but it remains to be seen how widespread they will become. The case of Dr. Midei, St. Joseph and Abbott suggests just how powerful the incentives are to maintain the status quo. Unless the nation takes strong steps to move away from the fee-for-service model of reimbursement, the names may change, but the story will stay the same: more care at higher cost, with no guarantee of better outcomes, and the taxpayer frequently picking up the tab.